Downtown St. Paul Macy's: Are days numbered?

Shoppers at the downtown St. Paul Macy's store last holiday season. (Pioneer Press: John Doman)

After a half-century downtown, the fate of St. Paul's Macy's store now hangs in the balance.

The department store once known as Dayton's, then Marshall Field's, is at the end of a 10-year commitment to the city of St. Paul; the deal helped keep the store open even during lean years for other downtown merchants.

Macy's won't yet reveal its plans for the St. Paul store, but the Cincinnati-based company is aware of the nervous chatter.

"There's of course speculation due to our agreement expiring at the end of 2012," said Andrea Schwartz, Macy's vice president for media relations. "However, Macy's just does not comment on rumors or speculation."

St. Paul city officials, meanwhile, say they're "in close contact" with Macy's, but they have no news, either.

The downtown St. Paul Macy's (Pioneer Press: John Doman)

"We don't have anything, other than that they're a good community partner and we're sending a lot of shoppers there," said Ellen Muller with the city's department of planning and economic development.

A decade ago, St. Paul officials approved a $6.3 million forgivable subsidy to Dayton's, as part of a $20 million renovation of downtown St. Paul's largest retailer. But there was a catch: If the store closed before Dec. 31, 2012, the aid would have to be repaid, plus interest.

With Macy's -- which acquired the Marshall Field's chain in 2006 -- free from that obligation in just a few days, there's new worry the St. Paul store is on the brink. Macy's typically announces its store closings shortly after the holidays, as it did nearly a year ago on Jan.

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4, when it announced the closure of its struggling Bloomingdale's store at Mall of America.

Fueling the concern is the St. Paul store's history as a lackluster performer, dating back even to when the Dayton family owned it.

"The store's been a challenge forever," said Jim McComb, a Twin Cities retail analyst, who cited its shrinking square footage, shorter hours and smaller ambitions as times and shopping patterns changed.

"It has a small but loyal customer base, who went to the store and knew what they could get there. But the basic issue is the size of the market. ... St. Paul has a relatively small market. The challenge for St. Paul has been, it didn't have as much mass as shopping centers like Rosedale or Southdale, and the evolution of Grand Avenue hurt downtown."

Back in 2001, the news that the St. Paul Dayton's store would be remodeled and remain open was greeted mostly with delight, after so many retail losses.

"Three major retail centers have all but disappeared in the last three years, starting with Town Square converting much of its retail to office space," the Pioneer Press reported in 2001. "Similar conversions are under way at the World Trade Center and Galtier Plaza. Excluding coffee shops, copy centers and eateries, Dayton's is about all that's left of retail in downtown St. Paul."

But struggling downtown stores are hardly unique to St. Paul. Across the country, downtown department stores have been in decline for decades. In recent years, both Saks Fifth Avenue and Neiman Marcus have announced they're leaving downtown Minneapolis, which still has a Macy's (the former Dayton's flagship).

"Across the nation, the number of remaining downtown department stores is relatively small," McComb said. "Most of the activities that have occurred have been store closings, rather than stores opening."

The St. Paul Dayton's first opened in 1963, as part of Dayton's dramatic expansion from its Minneapolis hometown into the St. Paul market. A few years earlier, Dayton's purchased Schuneman's department store in downtown St. Paul, announcing big plans for a modern, five-story department store at Wabasha and E. 6th St.

Bruce Dayton later wrote that the St. Paul store was modestly profitable, but never developed as the Daytons hoped.

"While the bottom line may not have justified the decision to build there, Dayton's presence in the depressed downtown business environment was important to St. Paul," he wrote in a company history, "The Birth of Target."